United States District Court, D. Colorado
OPINION AND ORDER ON MOTION FOR JUDGMENT ON THE
S. Krieger Chief United States District Judge
MATTER comes before the Court on the Defendants'
Motion for Judgment on the Pleadings (# 33),
the Plaintiff's response (# 34), the
Defendants' reply (# 35), and the
Plaintiff's surreply (# 44).
Internal Revenue Service (IRS) seeks a judgment for civil
penalties assessed against Defendants Urayb Wadhan and Said
Wadhan (the Wadhans), who had interests in multiple overseas
bank accounts, each with a balance greater than $10, 000. The
Wadhans contend that the IRS lacked the authority to impose
any penalty in excess of $100, 000. To resolve this dispute,
the Court exercises jurisdiction pursuant to 28 U.S.C. §
to the Complaint, the Wadhans failed to file or filed
inaccurate Forms TD F 90.22-1, Report of Foreign Bank and
Financial Accounts (FBAR) for 2008, 2009, and 2010. As a
consequence, the IRS assessed numerous penalties for multiple
FBAR violations, many of which were flat amounts of $100,
000. But for three violations, the IRS assessed penalties of
$1, 108, 645.41 for 2008, $599, 234.54 for 2009, and $599,
234.54 for 2010.
Defendants move for judgment on the pleadings (#
33) contending that the penalties for years 2008,
2009 and 2010 must be capped at $100, 000.
an “agency's action is entitled to a presumption of
validity, and the burden is upon the petitioner to establish
the action is arbitrary or capricious.” Sorenson
Commc'ns Inc. v. FCC, 567 F.3d 1215, 1221 (10th Cir.
2009). Once agency action is challenged, a district court
reviews the action as if it were an appellate court, applying
the Administrative Procedure Act. See Olenhouse v.
Commodity Credit Corp., 42 F.3d 1560, 1580 (10th Cir.
1994). The Court can set aside agency action if it is
“arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. §
factual record in conjunction with a motion for judgment on
the pleadings under Federal Rule of Civil Procedure 12(c) is
the same as that under Rule 12(b). See Ramirez v.
Dep't of Corr., 222 F.3d 1238, 1240 (10th Cir.
2000). The Court accepts all well-pleaded allegations in a
complaint as true and views those allegations in the light
most favorable to the nonmoving party. Stidham v. Peace
Officer Standards & Training, 265 F.3d 1144, 1149
(10th Cir. 2001) (quoting Sutton v. Utah State Sch. for
the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.
1999)). The Court also limits its consideration to the four
corners of a complaint, any exhibits attached thereto, and
any external documents referred to in the complaint if such
document is central to the claim and the parties don't
dispute the authenticity of the document. See Smith v.
United States, 561 F.3d 1090, 1098 (10th Cir. 2009).
Alvarado v. KOB-TV LLC, 493 F.3d 1210, 1215 (10th
a Rule 12(c) motion is directed to the claims asserted in the
Complaint such that “judgment on the case can be
achieved by focusing on the content of the pleadings.”
SKS Investments Ltd. v. Gilman Metals Co., No.
12-CV-0806, 2013 WL 249099 at *1 (D. Colo. Jan. 23, 2013). In
the Complaint, the IRS asserts only two claims - one against
each Defendant for penalties pursuant to 31
U.S.C.§5321(a)(5) for willful failure to file accurate
forms for numerous off-shore bank accounts (Report of Foreign
Bank and Financial Accounts) for 2008, 2009 and 2010. In
contrast, the issue presented in the subject motion only
concerns penalties imposed on certain accounts, but as to
the issue raised in the extant motion is much narrower, and
not configured to match the claims asserted, the Court
inquired of counsel how a ruling might be fashioned. Based on
their representations at a hearing conducted on July 17,
2018, the Court understands that the parties have submitted
all evidence that would bear on this issue in conjunction
with this motion. The Court therefore converts the motion to
one brought pursuant to Rule 56(a), and finds that there is
no genuine issue of material fact. Accordingly, the issue
raised can be determined as a matter of law. Fed.R.Civ.P.
focus of the dispute is upon the interplay between statutory
and regulatory law. The applicable statute with regard to
offshore accounts is 31 U.S.C. § 5321(a)(5). It
authorizes the Secretary of the Treasury to impose civil
penalties for violations of FBAR requirements, and for
willful violations sets the maximum ...